|The Tax Publishers2021 TaxPub(DT) 0198 (Bang-Trib)
INCOME TAX ACT, 1961
Where assessee received his share of built-up area in terms of JDA then the assessee was entitled to exemption under section 54 in respect of all the flats so received. The amendment made to section 54 with regard to word 'a' by Finance (No. 2) Act, 2014 is with effect only from 1-4-2015.
Capital gains - Exemption under section 54 - Built-up area received from the builder as per the JDA -
Assessee admitted LTCG arising from JDA in respect of the shares of 35.35% of immovable property. AO observed that LTCG for JDA should be taxed in assessment year 2009-10. In response to proposal by AO, assessee submitted that since the possession of the property from JDA was received during the assessment year 2012-13, the resultant capital gain was admitted in assessment year 2012-13 and tax was fully paid thereon. It was argued that same cannot be taxed again in assessment year 2009-10. There was no transfer under section 2(47)(v) during the assessment year 2009-10. Possession in assessment year 2009-10 given to the builder was not in part performance of contract within the meaning of section 53A of the Transfer of Property Act, 1882 because possession was only for limited purpose to facilitate construction of superstructure on the said site in terms of JDA. The AO concluded that the contract, read as a whole, indicates passing or transferring of complete control over the property in favour of the developer, then the date of the contract would be relevant to decide the year of chargeability and even arrangement confirming privileges of ownership without transfer of title could fall under section 2(47)(v) of the Income Tax Act. As such, assessment year 2009- 10 is the year of transfer and the income is chargeable in the said assessment year. The AO also did not grant the benefit of exemption under section 54 of the Income Tax Act for the entire built up area except for the self-occupied flat of the assessee. Before the first appellate authority the assessee raised objections with regard to the reopening of assessment, the year of taxability of long term capital gains and also with regard to the claim of deduction under section 54 of the Income Tax Act in respect of the entire built-up area received from the builder as per the JDA. The CIT (A) rejected all the contentions of the assessee. As regards to the claim of deduction under section 54 of the Income Tax Act, the CIT (A) followed the Special Bench order of the Tribunal in the case of CIT v. Sushila M. Jhaveri (2007) 107 ITD 327 (Mum) : 2007 TaxPub(DT) 1732 (Mum-Trib) and rejected the claim of the assessee that he is entitled to benefit under section 54 of the Income Tax Act for the entire super built-up area received from the builder as per JDA. Held: Amendment was made to section 54 with regard to word 'a' by Finance (No.2) Act, 2014 with effective only from 1-4-2015 withdrawing deduction for more than one flat. Post-amendment, viz., from 1-4-2015, benefit of section 54 will be applicable to one residential house in India. In present case, all the flats for which assessee was claiming exemption under section 54 were situated in the same premises. Therefore, assessee was entitled to deduction under section 54 on the entire built-up area received from the builder as per the JDA.
FAVOUR : In assessee's favour.
A.Y. : 2009-2010
IN THE ITAT, BANGALORE BENCH
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